World

Sri Lanka Will Turn Off Street Lights In Deep Economic Crisis

Sri Lanka was left with reserves of $ 2.31 billion as of February

Colombo:

Sri Lanka is turning off street lights to save electricity, a minister said on Thursday, as its worst economic crisis in decades brought more power outages and halted trading in its major stock markets.

The island of 22 million people struggles with continuous blackouts for up to 13 hours a day as the government does not have enough foreign exchange for fuel imports.

“We have instructed officials to turn off street lights across the country to help save power,” Energy Minister Pavithra Wanniarachchi told reporters.

The power outage adds to the pain of Sri Lankans who are already facing a shortage of essential goods and soaring prices.

Retail inflation hit 18.7% in March compared to the same period a year ago, the statistics department said on Thursday. Food inflation hit 30.2% in March, driven in part by currency devaluation and last year’s ban on chemical fertilizers which was subsequently reversed.

“This is the worst level of inflation Sri Lanka has experienced in over a decade,” said Dimantha Mathew, head of research at First Capital Research.

Delivery of diesel under the $ 500 million line of credit from India is expected on Saturday, Wanniarachchi said, though he warned that that would not solve the problem.

“When that arrives, we will be able to reduce the load shedding time but until we receive rain, maybe in May, electricity cuts will have to continue,” the minister said.

“There’s nothing else we can do.”

Water levels in reservoirs that feed hydro-electric projects have fallen to record lows, while demand has reached record highs during summer and drought, he said.

SLIDE STOCK

The Colombo Stock Exchange (CSE) reduced daily trading to two hours from the usual four and a half hours as electricity supply was cut off throughout the week at the request of brokers, the exchange said in a statement.

But stocks slumped after the market opened on Thursday and the CSE stopped trading for 30 minutes – the third time in two days – after the leading company tracking the index fell more than 5%.

“Concerns in macro terms, along with news of shorter trading hours as well as increased power cuts, are driving negative sentiment,” said Roshini Gamage, an analyst at brokerage firm Lanka Securities.

The crisis was the result of untimely tax cuts and the effects of the coronavirus pandemic coupled with historically weak government finances, causing foreign exchange reserves to decline by 70% in the last two years.

Sri Lanka was left with reserves of $ 2.31 billion as of February, forcing the government to seek help from the International Monetary Fund and other countries, including India and China.

(This story has not been edited by NDTV staff and is automatically generated from a syndicated feed.)

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